In a landmark decision, the NLRB, in a 3-2 decision, has ruled that using outsourced labor does not relieve a company from responsibility for workplace violations. It all stems from a Silicon Valley waste management company, Browning-Ferris Industries, that used a subcontractor, Leadpoint Business Services, to staff a recycling center in Milpitas, California. According to the NLRB ruling, the companies would be considered “ joint employers”, meaning both companies could still be on the hook for labor violations and ultimately may be required to bargain with Unions representing those employees.
This ruling, which was announced on August 27th, was applauded by the Teamsters Union, the Union that wanted to organizes the workers at the recycling center. However, this ruling reaches so many more companies that use subcontracted companies to perform work. Take for instance, franchises for fast food outlets. The parent company, say McDonalds or Burger King, may be responsible for the actions of the franchisee, even though the parent company did not hire the employee or directly pay their wages or benefits. The NLRB found that these parent companies still maintain control of some aspects of the franchisee’s business and therefore become “joint employers”. Since McDonalds is an employer, according to the NLRB, they may be held liable for workplace violations, and if the Unions organize workers, may be forced to negotiate with the Unions for a Collective Bargaining agreement.
This ruling is being hailed as a possible game changer for organizing efforts for Unions. If you would like additional information, please head to the internet and read the ruling and the consequences for employers and employees. It is well worth the time.